The availability of capital for developing photovoltaic markets
Name
MIT-EL-79-042-06353834.pdf
Size
1.43 MB
Format
Adobe PDF
Checksum (MD5)
66481eccfc0b23a673156432f0c4ce7e
Author(s)
Ellis, Phillip Allen
Date Issued
1979
Publisher
MIT Energy Laboratory
Series/Report no.
MIT-EL
79-042
Abstract
Capital availability is not a problem in a well-functioning market.
However, the market for photovoltaic cells is immature; in fact, the
market for grid-connected photovoltaic applications (the primary concern
of this study) does not yet exist. Therefore, the capital markets cannot
easily evaluate the credit-worthiness, the economic attractiveness of the
variety of photovoltaic production processes, research programs, or
end-use applications currently being developed. Only when photovoltaic
technologies converge to a roughly standardized set of mass production
methods and consumer applications will private capital markets perform
their job of allocating financial resources to the photovoltaic
industry. Until then, investigations into the question of capital
availability for this industry must focus on firm-by-firm "case" studies.
This paper examines capital availability for both the production and
consumption sides of this young industry. The experiences of
photovoltaic producers in obtaining and allocating capital are described
for three groups: oil company photovoltaic subsidiaries, electronic firm
subsidiaries, and independent producers. This discussion is based on
telephone and personal interviews with officials of the companies
described.
The capital availability problems of solar thermal consumers provide
a basis for anticipating such problems for future photovoltaic
grid-connected consumers. This basis is used to project the probable
behavior of capital markets once mass production is economically
feasible. Recent Congressional hearings on the creation of a Solar
Energy Development Bank provide the primary backdrop for this discussion.
It is concluded that given no change in federal programs to support
photovoltaic production and/or consumption, only "large," capital-rich
firms will enter the mass-production of photovoltaic cells. Small
independents can survive only if they are proficient in serving the
specialty, or systems, photovoltaic market. Large firms not currently
active in the photovoltaic industry will enter production through
acquisition or accelerated research programs once the mass-production
market develops and the profit potential is recognized. Finally,
consumers will have difficulty in locating financing for their
photovoltaic purchases for some time after the mass market opens up.
Recommendations include (a) no government subsidies until private
industry defines the best photovoltaics technology, and (b) creation of a
Solar Energy Development Bank after mass markets develop to dissolve the
reluctance of financial intermediaries to lend.
Description
Photovoltaics Project
Subjects
Photovoltaic power generation |x Economic aspects.
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